There is no strong case for the Bank of England to boost demand and prices, Monetary Policy Committee member David Miles said in a newspaper column on Sunday.
The bank is unlikely to change its path towards higher interest rates as inflation is likely to remain below the 2 percent target, he told The Sunday Telegraph.
«I don't think that lower inflation than seemed likely six months ago means that more expansionary policy is now needed; but it does mean that there is no great urgency in starting the process of moving monetary policy back towards a more normal setting,» Miles said.
Some policymakers suggested that the bank should loosen rather than tighten monetary policy. «This seemed wildly implausible just six months ago and I have my doubts even now.»
British inflation eased to a 12-year low of 1 percent in November on easing oil prices. Inflation is expected to fall further in the coming months.
The below target inflation is as bad as above target inflation. He noted that the current low inflation was not solely caused by lower energy prices.
«Domestic costs are rising unusually weakly. Unit labour costs – wages per unit of output – are flat over the past year as modest rises in productivity roughly match wage increases that have been running well below pre-crisis average rates,» Miles said.
The material has been provided by InstaForex Company – www.instaforex.com